Titan Energy Worldwide Letter to Shareholders
MINNEAPOLIS, March 26, 2013 /PRNewswire/ -- Titan Energy Worldwide, Inc. (OTC: TEWI), a leader in distributed power generation products and intelligent energy management services, today announced that it has released the following letter to its shareholders.
Dear Shareholder of Titan Energy:
The need for backup power is as strong as it has ever been. Our national power grid is being overtaxed, natural disasters seem to be striking with ever increasing frequency and unrelenting devastation. Titan Energy is poised in the center of this opportunity. With our ability to respond quickly in times of emergency, to find the right solution and to be an effective power partner to our customers, we have established a solid reputation for excellence and a growing national brand that is beginning to rival companies many times our size.
Titan Energy began as a small regional distributor of generators in the Midwest. Along the way we have leveraged our technological expertise and our industry relationships to build a highly skilled network that now allows us to operate on a national scale. And today we have an opportunity to become a true national player in the ever-growing energy marketplace.
2012 was a strong turnaround year for Titan Energy. Overall sales increased 36% year over year. Growth in our service business was more than 50%. We advanced from a negative $1.4 million in adjusted EBITDA in 2011 to a positive $350,000 in adjusted EBITDA in 2012. Based on our current backlog, we are on course to do $25 million in overall sales in 2013, an increase of more than 25% over the $19 million we achieved in 2012. We expect to surpass this current projection as new potential opportunities are realized. I believe we have a very good shot at ending the year profitable, and as a company we are committed to that goal.
Market Outlook. Several factors point in Titan Energy's favor as we head into 2013.
- The number of storms that have hit the country in the past few years is exposing the weakness in our aging grid and highlighting the need for companies to deploy their own onsite power resources. Titan's ability to responds to the needs not only of our customers but to other companies in the areas hit by Hurricane Sally for example, have created many new opportunities for us in the Northeast and other regions.
- We are beginning to see clear signs that new construction is on the rise. With new business centers, hotels and healthcare facilities, there will be the need for new onsite power systems.
- The power equipment we sell is better and more sophisticated. Generac Power Systems (www.generac.com), our generator manufacturer in the Midwest, has shown significant improvements in the capabilities, reliability and over all acceptance of its brand among customers for industrial and commercial onsite power generators.
- C&I generators are becoming more technically advanced while being deployed in more demanding situations than in years past. These onsite power systems require a highly skilled service provider such as Titan Energy to best maintain and operate them. Titan has led the industry in developing the latest monitoring, auditing and other automated solutions which greatly improve our ability to manage and maintain these power systems, lower costs for our customers, improve our profitability and create greater customer retention.
Financial Results for 2012. We will be publishing our 2012 Annual report (Form 10K) in the next few weeks. A turnaround year, Titan Energy ended 2012 with a very strong fourth quarter. We saw two $1 million months in service buoyed largely by growth in our national accounts business. Total sales revenues grew 36%, with equipment sales growing by 28% and service revenues by 51% over 2011.
Combined with a 5% decrease in general and administrative expenses and 60% decrease in corporate expenses, these strong revenue numbers helped us generate a positive adjusted EBITDA of nearly $350,000 for the year. This represents a turnaround of nearly $2 million from 2011.
1st Quarter 2013. The first quarter of 2013 is not quite finished, but we can project sales revenues that will be 40% higher compared to the 1st q of 2012 with greatly reduced losses. The first quarter is historically our most difficult quarter as cold winter conditions in the Midwest can push out new equipment installations and some of the our larger national accounts do not complete their budgetary process or release new work orders until March or later. Still we demonstrated not only strong growth but continued improvement in our bottom line.
Equipment Sales. Titan sales of generators increased more than 36% in 2012. We believe a significant reason for this increase is due to the greater awareness businesses have acquired on the need for backup power after the last series of devastating storms. At the same time, we believe the line of generators we represent in the Midwest, Generac, is gaining stronger acceptance among commercial and industrial contractors in our territories.
Service Operations. I personally believe we have the finest and most dedicated service department in the U.S. and service continues to be the strongest performing segment of our business. With margins that are in the 50% to 70% range, the increase in our service business accounts for the majority of our drive towards profitability. In 2013, we are looking to increase service sales significantly in the Midwest, as well as in the Southeast and Northeast. The Northeast in particular is a tremendous market for Titan Energy and our service center in that area has shown 100% growth since 2011 with even greater potential ahead of us.
RICE NESHAP. The EPA, through a ruling called RICE NESHAP, now requires many generators enrolled in peak shaving or demand response programs to be mechanically modified so as to lower their emissions. Titan has received more than $2 million in purchase orders to date for the modification of generators in the Midwest and we believe that this business will continue for us through 2013. RICE NESHAP also requires these same generators to be monitored and report their equipment's performance. Titan has been successful in placing its own proprietary monitoring system on many of these installations thereby creating ongoing recurring revenues and providing us with the opportunity to be the service partner for these customers as well.
National Accounts. National accounts revenues grew from $400,000 to more than $3 million in 2012. We are projecting national account sales to surpass $5 million in 2013 based on our currently contracted customers. We now service more than 2,000 generators nationwide and have multiyear contracts with one of the major retailers in the nation and one of the largest owners of data centers. We are actively seeking to expand this base of national customers, focusing on the retail, property management and health care markets.
Monitoring Technology. I am confident that Titan's monitoring system for onsite power generators is the most robust and advanced in the market. Having completed the beta test on this system, this service is now operating with several clients utilizing a robust, commercial grade cloud-based service. Teamed with our 24/7 call center, we are now ready to begin taking on additional commercial clients including a number of our Fortune 500 service customers.
One unique aspect of our platform is that it is capable of monitoring the EPA's required emissions modifications that were imposed recently through RICE NESHAP in addition to the functions of the generator itself. Titan is one of the few companies to offer this valuable product for the tens of thousands of generators enrolled in peak shaving programs that must meet both the EPAS requirements as well as maintain their service schedules so as to perform during peak shave events.
UPS Sales and Service. Last year we greatly enhanced our ability to provide sales and service to an important part of the most onsite power systems: Uninterruptible Power Supplies or UPS. UPS is the vital back up component that provides electricity during the seconds or even minutes before a generator comes on during an event. We have hired a seasoned UPS veteran experienced with over 25 makes and models of UPS to build this program on a national level for Titan energy.
Highly profitable and growing in demand among many companies, we see the potential for UPS sales and service as one that will rival our equipment sales. At the same time, Titan will be one of the few generator service companies that can seamlessly support UPS and battery sales and maintenance, making us a truly complete service partner for many companies nationwide.
Strong Growth in Northeast Segment. Our sales in our Northeast operation continue to grow. The storms that have recently hit the New York and New Jersey areas have significantly increased service work for us as well as improved equipment sales as more companies are responding to the need to avoid future power outages.
We realized $2.4 million in equipment sales revenues in the Northeast in 2012. To date, we have more than $4 million in purchase orders for 2013. Another way to look at this is that Northeast orders now represent 40% of Titan's entire backlog.
Changes in Southeast segment. Last year, we made the decision to discontinue the equipment sales division of our southeast operations as poor sales and low margins were creating losses for the company. Since reorganizing the operations in August of 2012, the service division has been able to maintain a profitable operation throughout most of those months and has continued to service our national accounts in the Southeast.
Challenges. We currently have about $3.5 million in convertible debt that comes due in April of this year. We are hopeful that we can work out an arrangement with these note holders to restructure their notes thereby better positioning us with our vendors, customers and financial partners, but there is the possibility the Company could be in default on some or all of these notes. We will also strive in 2013 to obtain a more versatile and cost effective line of credit, thereby lowering our interest expenses considerably.
All in all, we expect 2013 to be an exciting year for Titan, a year of growth, opportunity and profitability. A year when the Titan name achieves a new level of value. I wish to extend my appreciation to all the shareholders who have supported Titan Energy through the years.
More detailed information will be available in the Company Form 10K Annual Report which is forthcoming shortly and can be accessed at www.sec.gov.
Chief Executive Officer/Chairman of the Board
About Titan Energy Worldwide, Inc.
Since its founding, Titan Energy Worldwide has been dedicated to helping companies meet their power generation and energy management needs. To date we have focused on providing thousands of customers with the most advanced power generation equipment to enable their operations to continue uninterrupted during times of power failures or disasters. We have also established a professional service team that helps customers to maintain and manage their power generations assets. From emergency and backup power technologies, to demand response programs and Smart Grid applications, Titan Energy is setting a path for the future in energy management. For more information, please visit the company's website at: www.titanenergy.com.
Investors are cautioned that certain statements contained in this document as well as some statements in periodic press releases and some oral statements of TEWI officials are "Forward-Looking Statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, which include words such as "believes," "anticipates," "intends," "plans," "expects," and similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future TEWI actions, which may be provided by management, are also forward-looking statements as defined by the Act. Forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to materially differ from any future results, performance, or achievements expressed or implied by such forward-looking statements and to vary significantly from reporting period to reporting period. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual future results will not be different from the expectations expressed in this report. These statements are not guarantees of future performance and TEWI has no specific intention to update these statements.
For more information about Titan Energy Worldwide please contact:
Titan Energy Worldwide, Inc.
SOURCE Titan Energy Worldwide, Inc.
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